Healthcare is a massive industry that never stops, especially in the United States, which uses a mostly privatized system. It's a great place to go looking for winning stocks. The good news is that there are fantastic stocks to buy and hold, regardless of your investment strategy or style. Are you looking for passive income or dividend growth? You're in luck. Want high-octane growth? Stick around.
I did an exhaustive search to find three stocks long-term investors can own for under $1,000 and hold indefinitely due to their long-term growth opportunities. Here is what I found. Consider buying one (or all of them) and watch your portfolio grow.
1. Hims & Hers Health: Buy this stock for growth
Hims & Hers Health(NYSE: HIMS) has emerged as an early winner in the growing telehealth industry. The consumer-facing brand offers professional online consultation for numerous conditions, from obesity to hair loss and erectile dysfunction. Patients can order prescription products and have them shipped to their homes if approved. It's highly competitive, but Hims & Hers is becoming a leader. The company's subscriber count has grown from 192,000 subscribers to over 1 million since the second quarter of 2019. Today, Hims & Hers is still growing revenue at a 50%-plus rate while earning generally accepted accounting principles (GAAP) profits. That sets the stage for years of earnings growth that could drive excellent investment returns.
The stock has stumbled recently due to fears that Hims & Hers will lose its ability to sell popular GLP-1 products, but this concern seems misplaced. The stock trades at just 68 times its estimated 2024 earnings, which is a bargain considering the business just turned profitable and will enjoy rapid earnings growth as sales continue to pile up. The stock's market cap is only $3.2 billion today, twice its potential revenue this year. And remember, this company is growing by over 50% year over year. Hims & Hers could be a multibagger if it maintains its growth rates. This story isn't over by a long shot.
2. UnitedHealth: Buy this stock for capital gains and dividend growth
UnitedHealth Group(NYSE: UNH) is arguably the top dog in America's healthcare system. Most consumers primarily recognize the company's presence in health insurance, but its Optum unit is tremendous, too. It provides various services, from care and prescriptions to data analytics. Optum's footprint spans the healthcare sector. UnitedHealth generates nearly $400 billion in annual revenue, making it one of the world's largest companies. UnitedHealth can leverage its size to provide better products and services for less in a highly fragmented but massive U.S. healthcare market worth $4.5 trillion.
The stock has been a two-headed winner for investors. UnitedHealth has outperformed the S&P 500 purely on price appreciation over its lifetime. Toss in dividends, and it gets even more exciting. A $10,000 investment in UnitedHealth's initial public offering (IPO) back in October 1984 would be worth $52.1 million today. Plus, management has committed to the dividend by raising it for 15 consecutive years. The average annual increase has been 21% for the past decade. UnitedHealth is a true wealth compounder that any long-term investor can hold in their portfolio for as long as the U.S. healthcare system allows corporations to thrive.
3. AbbVie: Buy this stock for its generous dividend
AbbVie(NYSE: ABBV) was part of the legendary healthcare conglomerate Abbott Laboratories, but the company spun it off over a decade ago. Since then, the pharmaceutical giant has established itself as one of the best dividend stocks you can buy. AbbVie built itself on Humira, formerly among the world's top-selling drugs, but it also sells multiple blockbuster products, like Botox, Skyrizi, and Rinvoq. Pharmaceutical drugs are highly profitable once they enter production, so AbbVie has been able to share much of its profits with investors.
The stock's dividend yield is 3.2% today, yet the dividend consumes only 60% of the company's cash flow. AbbVie has raised its dividend yearly as a public company, and its true dividend history goes back to its days as part of Abbott Labs, a Dividend King in its own right. There were some market fears that AbbVie's business would crumble when its patents on Humira expired. However, management prepared the business well by acquiring and developing new revenue streams. Now, analysts see AbbVie growing sales at a mid- to high-single-digit rate starting next year, which should power solid dividend growth for an already generous payout.
Should you invest $1,000 in Hims & Hers Health right now?
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Justin Pope has positions in Hims & Hers Health. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.
